Munis rally as Treasuries continue to firm; Wisconsin brings $250 million G.O. refunding bonds

By Sheri Kasprzak

New York, Sept. 22 - Municipals staged a rally on Thursday, following in line with Treasuries. Most maturities beyond five years were seen firmer by 4 basis points to 13 bps. Shorter maturities were largely flat, market insiders reported.

Fifteen-year municipal yields were down more than 14 bps, and 20-year yields were down 12 bps. Thirty-year yields were down more than 10 bps.

Treasuries enjoyed a Federal Open Market Committee rally, and municipals were along for the ride, even though Treasuries are still outpacing munis, said one trader reached during the session.

"We're coasting along," he noted of the dive yields took on Thursday.

Alan Schankel, managing director with Janney Montgomery Scott LLC, said Thursday that muni-to-Treasury ratios continue to rise to 2011 highs.

"Ten-year ratios, which have averaged 93% in 2011, hit 112% while in 30 years, the ratio popped to 121%, based on MMD AAA benchmark yields," Schankel wrote in a report.

This environment, Schankel said, is ideal for new issues.

"Most of this week's $8.5 billion slate is being well absorbed with issues such as the $2.6 billion California G.O.s moving up sharply in post-sale secondary trading," he noted.

The flow will continue in the coming week, Schankel reported, noting that the Port Authority of New York and New Jersey is poised to bring $1 billion of bonds for the World Trade Center site and that the City of New York also has a couple of new offerings in the works.

Wisconsin sells $250 million

Heading up Thursday's primary calendar, the State of Wisconsin priced $250 million of series 2011-2 general obligation refunding bonds, said a partial term sheet.

The bonds were sold through Jefferies & Co. and Siebert Brandford Shank & Co. LLC.

The bonds are due 2013 to 2022 with 3% to 5% coupons.

Proceeds will be used to current and advance refund existing G.O. bonds.

New York power prices

Elsewhere, the Power Authority of the State of New York sold $110.21 million of series 2011A revenue bonds Thursday, said a term sheet.

The bonds were sold through Ramirez & Co. Inc.

The bonds are due 2012 to 2031 with a term bond due in 2038. The serial coupons range from 2% to 5%. The 2038 bonds have a split maturity with a 4% coupon priced at par and a 5% coupon priced at 108.677.

Proceeds will be used to refund the authority's series 2000A and 2002A revenue bonds.

D.C. poised to bring TRANs

In the coming week, the District of Columbia is scheduled to price $820 million of series 2012 G.O. tax revenue anticipation notes, said a preliminary official statement.

The notes (MIG 1/SP-1+/F1+) will be sold on a competitive basis on Tuesday with Phoenix Capital Partners LLC and Public Resources Advisory Group Inc. as the financial advisers.

The notes are due Sept. 28, 2012, and the coupon has been set at 2%.

Proceeds will be used to finance capital needs for fiscal year 2012 ahead of the collection of certain taxes.

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